MIND C.T.I. Ltd's (NASDAQ:MNDO) CEO Compensation Looks Acceptable To Us And Here's Why

MIND C.T.I. Ltd (NASDAQ:MNDO) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 11 May 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for MIND C.T.I

Comparing MIND C.T.I. Ltd's CEO Compensation With the industry

Our data indicates that MIND C.T.I. Ltd has a market capitalization of US$60m, and total annual CEO compensation was reported as US$514k for the year to December 2020. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$240k.

In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$506k. This suggests that MIND C.T.I remunerates its CEO largely in line with the industry average. What's more, Eisinger Iancu holds US$10.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	US$240k	US$240k	47%
Other	US$274k	US$282k	53%
Total Compensation	US$514k	US$522k	100%

Speaking on an industry level, nearly 11% of total compensation represents salary, while the remainder of 89% is other remuneration. It's interesting to note that MIND C.T.I pays out a greater portion of remuneration through salary, compared to the industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at MIND C.T.I. Ltd's Growth Numbers

MIND C.T.I. Ltd has reduced its earnings per share by 2.4% a year over the last three years. Its revenue is up 3.1% over the last year.

A lack of EPS improvement is not good to see. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has MIND C.T.I. Ltd Been A Good Investment?

We think that the total shareholder return of 86%, over three years, would leave most MIND C.T.I. Ltd shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for MIND C.T.I that investors should think about before committing capital to this stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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